ISDA panel to reconvene on Venezuela CDS auctions

NEW YORK, Nov 20 (IFR) - An industry committee said on Monday it will reconvene next week to discuss terms of two auctions that will determine the payout on some US$1.5bn of CDS contracts tied to Venezuela’s bonds.

The 15-member committee, organized by the International Swaps and Derivatives Association (ISDA), declared Venezuela and state-owned oil company PDVSA in default on Thursday after the country failed to make timely payments on some of its bonds.

That decision will trigger payouts to holders of Venezuela’s and PDVSA’s credit default swaps - derivative contracts investors use to hedge their risks.

The committee now needs to come up with a list of bonds that will be delivered into the auctions - one for Venezuela and one for PDVSA.

It will hold its next conference call on the issue on November 27, it said in a statement posted on ISDA’s website on Monday.

The auction process will determine how much the bonds are worth and, in turn, the cash compensation buyers of CDS protection will receive.

The face value of net CDS contracts outstanding on Venezuela’s sovereign bonds is around US$1.3bn, according to data from clearing house Depository Trust & Clearing Corporation.